PORTLAND, Ore. (KOIN) — Gift cards can be a lifesaver if you aren’t sure what to get a loved one, but a new report from the AARP Fraud Watch network warns America’s favorite gift has become a “goldmine for criminals.”
According to the latest AARP Gift Card Scams report, there has been a spike in cases of gift card fraud, as now one-in-three U.S. adults claim they or someone they know has been targeted by scams seeking payment by a gift card.
Just last year the Federal Trade Commission (FTC) found 73 million adults reported they had experienced gift card-related fraud, which resulted in more than $233 million in total losses – and those statistics only reflect the reports that were made.
And although scammers are always developing new ways to take advantage of unsuspecting victims, AARP warned “Criminals love gift cards because they are extremely difficult to track and readily available, enabling them to convert the money to cash or cryptocurrency and move large sums of money in small pieces.”
Additionally, AARP said these types of money scams can be especially devastating for those targeted, as the report revealed most victims were not able to reconcile their losses or receive a refund.
This national issue is also impacting residents here in Oregon, as the state’s attorney general warned the public about the “dark side” of the seemingly harmless pieces of plastic just two years prior.
“Gift cards are for gifts, not payments,” Oregon Attorney General Ellen Rosenblum stated in 2020. “Anyone who demands payment by gift card is a scammer.”
Types of gift card fraud: How scammers are targeting victims
Kathy Stokes, Director of Fraud Prevention Programs for AARP spoke to KOIN 6 News to break down how scammers are using gift cards to trick victims out of funds.
According to Stokes, one of the most common ways scammers are using gift cards to pillage the wallets of unsuspecting consumers is through zero-value gift cards and gift card payment scams.
“We’re seeing two basic scenarios; One is when you give or receive a card as a gift and find out that there was no value on it,” Stokes explained. “We do know that criminals have ways of accessing cards that are on retail racks, manipulating them so that when they are purchased, they know that and they’re able to drain the value off it almost immediately.”
While Stokes pointed out that a lack of funds on a seemingly new card could be the result of a card error or confusion on the consumer’s part (who may have forgotten they already spent it), she said AARP’s recent report showed an emerging trend where nearly a quarter of gift card fraud victims reported that they had either received or been given new gift cards that had no funds on them.
“So that’s the one scenario,” Stokes continued. “The other is when a criminal convinces a target that they owe some sort of financial obligation, and the best way to pay for it is to go down to the store, buy a certain gift card, put a certain amount of money on it, and then call them or take pictures and share those numbers. And as soon as those numbers are shared, the cards are drained.”
A similar trend in gift card payment scams was spotted here in Oregon back in 2020, causing the Oregon Department of Justice to warn residents to never disclose gift card pin information to others -particularly over the phone.
“Scams involving gift cards are constantly changing, but the most common type asks victims – usually over the phone – to buy a gift card to pay legal fees, bail, taxes or other “urgent” expenses,” stated the Department. “If you receive a call or email asking for payment by gift card, know that it’s a scam. Report it to the Oregon Department of Justice right away.”
According to the recent AARP Fraud Watch Network report, 25% of those targeted by this type of gift card payment fraud, fell victim to the scam after sharing sensitive card information while under the impression that they were paying for a legal obligation, fees for a sweepstakes or lottery prize, or doing a favor for someone they knew.
How consumers can protect themselves
Stokes told KOIN 6 News the safest way for consumers to protect themselves from becoming a victim of gift card scams is to purchase the card online directly through the retailer’s website.
This eliminates the threat of zero-value gift cards, as the receipt and card information can be sent directly to the intended recipient via email.
However, Stokes said if consumers are looking to buy a gift card in-person at a retail store there are a few things to watch out for.
“If scammers have manipulated or otherwise obtained information on those cards, it’s probably more likely that they hit the first ones in the rack and not the back ones,” Stokes explained. “So, I would always take a card from the rear of where the hanger is, and then take a close look at that card. Is it well packaged?”
Stokes told KOIN 6 News if a card lacks secure packaging, or if the film that covers the activation code appears to be tampered with it is best to avoid purchasing the card.
Additionally, Stokes encourages consumers to keep the receipt if possible and register the card with the issuer, as it may make it easier to resolve an issue down the road.
“Education really works,” Stokes added. “If anyone has learned something new about gift card fraud today, pass it forward, share it with your family and your friends. Because when you know about a scam, you’re 80% less likely to engage with it to begin with, and if you do, you’re 40% less likely to lose money or sensitive information. So pass it forward.”
Consumers who suspect they may have been the target of a gift card scam can report the incident by calling 1-877-877-9392 or filing a complaint online at www.oregonconsumer.gov.